Brazil lawmakers to lobby for Cemig dams' renewal -sources

Energy of Minas Gerais

19/04/2017 12:00

By Guillermo Parra-Bernal and Luciano Costa 
    SAO PAULO, April 19 (Reuters) - Senators and lower house 
lawmakers representing Brazil's state of Minas Gerais have 
joined forces to help Cia Energética de Minas Gerais SA lobby 
for the renewal of four hydropower dams whose licensing rights 
expired recently, two people with direct knowledge of the 
situation said on Wednesday. 
    Former presidential runner-up Aécio Neves and Antonio 
Anastasia, both senators representing Minas, will lead efforts 
to renegotiate renewal of the São Simão, Miranda, Jaguara and 
Volta Grande dam licenses for Cemig with the National Treasury 
and other federal bodies, said the people, who asked for 
anonymity to discuss the matter. 
    Cemig, controlled by the Minas Gerais state, needs to regain 
control of the dams to rein in rapid debt growth. Debt tripled 
since 2012, when a federal government decision to renegotiate 
power contracts dented the value of electricity assets and 
hampered project returns. 
    The utility has incurred heavy losses and cut capital 
spending for this year to cope with loss of the dams. Minas 
Governor Fernando Pimentel and archrivals Neves and Anastasia 
will work together to facilitate renewal of the dam licenses 
with the federal government for 20 years, the people said. 
    One alternative would involve using two Cemig subsidiaries 
to pay a 3 billion reais ($966 million) tranche of the licensing 
fee, one of the people said. The rest of the money would come 
from Cemig and could even involve offering a stake in the dams 
to the federal government, the same person added. 
    Press representatives for Neves and Anastasia confirmed 
their engagement on the renewal plan, without elaborating. Cemig 
did not have an immediate comment. 
    Preferred shares  CMIG4.SA , Cemig's most widely traded 
class of stock, gained 0.2 percent on Tuesday. Expectations of a 
renewal of the dams and faster asset sales have bolstered the 
stock 22 percent this year. 
 ($1 = 3.1071 Brazilian reais) 
 
 (Editing by David Gregorio) 
 ((guillermo.parra@tr.com; +55-11-5644-7714, +55-119-8346-7153; 
Reuters Messaging: 
guillermo.parra.thomsonreuters.com@reuters.net)) 
 
Keywords: CEMIG HYDRO/RENEWAL